Formation of a Favorable Environment for Foreign Investment: Institutional and Economic Development Opportunities in the Post-Conflict Territories of Azerbaijan

Abstract

The restoration and reconstruction process in the post-conflict territories of Azerbaijan is not merely the physical restoration of infrastructure, but also a stage for establishing a new economic space and investment architecture. This article analyzes the theoretical foundations of forming a favorable environment for foreign investment, the factors determining investor behavior in post-conflict economies, and the institutional-economic opportunities emerging in the liberated territories of Azerbaijan.

The research shows that attracting foreign investment to post-conflict areas is not limited to tax incentives; factors such as security, protection of property rights, logistical connections, state coordination, new industrial zones, the green energy agenda, and regional reintegration exert a combined influence. The "Great Return" program, the Coordination Headquarters, industrial parks, tax and customs exemptions, as well as transport and airport infrastructure in Azerbaijan, create an initial platform of confidence for foreign investors.

The article points out that the Karabakh and East Zangezur economic regions can serve as a new investment geography in terms of agriculture, industry, logistics, tourism, green energy, and the manufacturing industry. At the same time, constraints such as the landmine threat, market uncertainty, insurance costs, and international risk perception still remain. As a creative approach, the article proposes the ideas of an "investment confidence corridor," "phased risk sharing," and a "special post-conflict investment regime." Consequently, it is argued that the favorable environment for foreign investment in Azerbaijan's post-conflict territories will be sustainable and competitive only if it is strengthened not only by economic incentives but also by institutional stability, management flexibility, and a long-term geo-economic vision.